North Texas Real Estate Blog

Tarrant County home buyers and sellers, as well as other parts of the Dallas/Fort Worth area are experiencing an increase in sales transactions over the past year. This is due in part to the tax credit available for first time homebuyers and also due to more affordable home prices than in recent years. In cities like Keller, Euless, Bedford, Hurst and North Richland Hills there are many homes priced that are eligible for FHA financing. Although FHA financing requires a relatively low down payment and offers low interest rates to attract buyers, there are some aspects of the property appraisal process that can cause a transaction to come to an abrupt halt.

All FHA insured mortgages must have an appraisal of the subject property by an FHA approved appraiser. This appraiser is hired by the lender that will be underwriting the mortgage. The FHA appraiser will perform a through inspection to estimate the value of the property. The appraiser will forward their report to the lender and with this information the lender will decide whether or not to approve the application for the loan. Although the FHA loans are backed by the government, in the event of a foreclosure, the lender that provides the mortgage is not guaranteed the full repayment of the loan. The lender must carefully evaluate the risk of approving the loan to the potential loss in the event of a foreclosure.

FHA loans constitute almost 25 percent of all mortgages. With a low down payment, roughly 3 ½ percent, it makes the possibility of home ownership possible for more people. Maximum loan amounts do exist and are based on the location of the property. Private mortgage insurance is required on all mortgages that have less than 20 percent down payment or equity. FHA does have other requirements, such as termite inspections, and other minimum requirements that a home must meet before qualifying for a FHA loan. If a home does not appraise for the amount of the loan, even if the buyer and seller believe that the property is worth the sales price, the loan will not be approved unless the seller reduces the sales price or the buyer pays the difference in cash for the property.

While FHA loans are an affordable way for individuals to purchase their home, buyers need to be aware of the strict guidelines and requirements that accompany these loans. To learn more about FHA loans, contact Dave and Betty Warden at 817-706-3291. We work closely with several home mortgage consultants that can help you with the right loan for your needs.